Bank chief opposed rate cut

THIS month's cut in interest rates wasn't the inevitability most economists predicted with official records showing a key Bank of England vote went to the wire.

Minutes from the Bank of England's Monetary Policy Committee meeting two weeks ago showed five members of the nine-strong committee voted in favour of a cut in rates.

Bank governor Mervyn King voted against the cut, which meant he was in a minority for the first time since his appointment.

King has always been on the majority since the Bank was given the responsibility for rates in 1997.

It was expected the committee would approve the cut with a larger majority, but the slim victory limits the chance of a further cut before the end of the year.

The Bank will be particularly nervous after inflation rose at its fastest pace for eight years in July, largely fuelled by the rising price of oil.

In July, the MPC voted 5-4 to leave rates unchanged. This month, MPC member Richard Lambert tipped the balance by switched his vote from 'hold' to a quarter point reduction.

According to the minutes, those who voted for a cut were swayed by subdued output growth and slowing household spending.

'Although there had been some signs of a pickup in consumer spending in quarter two, downside risks remained in the near term given the loosening of the labour market and uncertainty about the underlying strength of consumer spending in the first half of the year,' says the official record.

Members who rejected a cut said the economy was still operating close to full capacity and was likely to be supported in the months to come by the strengthening world economy.

Tellingly, they added that it was unlikely that inflationary pressures had abated due to the oil situation.

JOBLESS TOTAL RISES

THE number of people claiming Jobseeker's Allowance has risen for the sixth month in a row - the longest stretch of increases in nearly 13 years, official figures showed today. The so-called claimant count rose by 2,800 in July to 866,000, an increase of 27,800 from a year ago. Total unemployment, including people not eligible for benefit, rose by 27,000 over the quarter to June to 1.42 million. The rise affected mainly women.